No direct link between RFS and rising food prices: study

Source: by Christopher Doering, Des Moines Register • Posted: Friday, June 14, 2013

A study funded by the ethanol industry found there is no direct link between the country’s renewable fuel policy and higher food prices.

The report, released by ABF Economics, said the country’s Renewable Fuel Standard — an 8-year-old law that requires refiners to produce alternative fuels to help reduce the country’s dependence on foreign energy – is only one factor behind the increase in corn prices. Commodity market speculation, expanding global demand for food and agricultural commodities are among the other contributing factors.

The “ABF Economics analysis provides definitive evidence that ethanol and the RFS are not driving food prices,” said Bob Dinneen, president of the Renewable Fuels Association. “That canard has been nothing but a distraction propagated by those wanting to continue profiting from government subsidized grain and those seeking to keep us ever dependent on petroleum. This report should end the food vs. fuel debate for good.”

The Renewable Fuels Association commissioned the ABF Economics study.

The report also found that food prices at the retail level have increased at a slower rate since the RFS took effect than in the five years before it began. It also found the RFS has not had an adverse impact on the ability of consumers to afford a safe and healthy food supply. In addition, the mandate has lead to the production of distillers dried grains that have helped reduce feed costs for livestock producers.

The ethanol industry and its critics have been at loggerheads over the future of the RFS. The American Petroleum Institute, the restaurant industry and other opponents have called for the law to be repealed or rolled back. Last year, when much of the United States was in a drought, opponents of the mandate asked the Environmental Protection Agency to waive it in order to allow corn used to produce ethanol to be given to feed animals. They claimed it would lower food prices for meat and other commodities. The EPA rejected that request.